For those not familiar with the steemit system yet, that may seem like a valid question.

So, what's the real answer?

Here's how I understand it.

Define "fiat."

Technically, fiat simply means that a currency has been declared to be legal, but that it is not backed by any physical commodity. This leads some to conclude that although a type of "money" may be accepted, since it's not tied to anything tangible, it's actually fake.

Cryptocurrencies

Can cryptocurrencies, such as STEEM or bitcoins, be accurately defined as "fiat"?

Define "cryptocurrency."

A cryptocurrencyis a digital or virtual currency, a medium of exchange, that utilizes cryptography for security. The encryption techniques used regulate the generation of the currency and can be used to verify transactions.

Are Cryptocurrencies Backed by a Physical Commodity?

No, cryptocurrencies like Ethereum, Bitcoin, and STEEM are not backed by a physical commodity.

Where do Cryptocurrencies Come From?

These electronic currencies are mined by using a computer to process a hashing algorithm.

So, Cryptocurrencies are Virtual Currencies NOT Backed by a Physical Commodity Like Gold or Silver?

Exactly.

THE OTHER HALF OF THE STORY... $$$$$$

A story will often have two sides. The validity of the US Dollar is a presupposition that many in America and around the world have. However, the majority never peek behind the curtain. Historically, the concept of money was more of an IOU than a sign of wealth. The coin or paper note did not hold the value within itself.

It was a representation of something valuable.

The old US currency commonly known as a Silver Certificate read "THIS CERTIFIES THAT THERE HAS BEEN DEPOSITED IN THE TREASURY OF THE UNITED STATES OF AMERICA ONE SILVER DOLLAR... Payable to the Bearer on demand".

Payable on Demand?

Yes, the paper note represented the existence of the physical commodity, in this case Silver. Upon demand, the bearer of the paper note could exchange it for the actual Silver Dollar. Though the Silver Dollar was not as light or easy to carry around, it was actually made out of Silver, and therefore held intrinsic value within itself.

What Happened?

As you may be well aware, such is no longer the case for the US Dollar. Who knows what, if anything is left in the treasury. Way back in 1913, President Woodrow Wilson signed the Federal Reserve Act into law, which allowed a central bank to print our currency rather than the government. By 1971, Federal Reserve Notes were the only form of US currency. Federal Reserve Notes are not backed by any physical commodity, like Silver or Gold. Though American currency was once backed by physical commodities, such is no longer the case.

Does That Mean That the US Dollar is FIAT Currency?

By definition, yes.

So, to supposedly "crack down on fiat currency" the United States government would actually have to commit economic suicide?

Yes. The US would first have to take care of its own fiat currency.

What's the Real Difference Then?

On the surface, not much. One is made out of paper and the other is digital. The only other obvious difference is that the US government sees its own currency as valid, and STEEM is not quite there... yet.

So, other than the US Government accepting their currency and not yet accepting STEEM, there's not much difference?

Not quite. STEEM can be converted into USD by using Bitcoin, so it ends up being just as usable. In fact, based on my current understanding, STEEM is in a much better economic position than the US Dollar.

How So?

At the moment, about $1.4 trillion in Federal Reserve Notes are in circulation.

Since it's not backed by anything, we'll play along and just call that + $1.4 trillion.

Wow, We're up Almost a Trillion and a Half! Pretty Good, Huh?

Well, the student loan debt alone at the beginning of this year was at $1.2 trillion.

We will call that -$1.2 trillion.

So, when you take all of the "US Dollar" Federal Reserve Notes supposedly in circulation and only subtract the current student loan debt, you've only got $.2 trillion left.

When you take into consideration the $8.25 trillion in mortgages, another $1 trillion in car loans, and $730 billion in credit card debt, I think you can see the issue.

Didn't You Forget About the National Debt?

Yeah, you would also have to subtract the $18 trillion that the federal government is debt too.

Isn't that closing in on $30 trillion more worth of debt than what actually "exists"?

I noticed you used quotation marks for "exists". You're right. There's about $30 trillion less than they even pretend exists. Crazy, but that's where the United States is at.

Suddenly, STEEM and other cryptocurrencies don't seem quite as "fake" as some seem to believe.

I'd say. Steemit is booming, and progressing excellently. As a community, a lot of people are really putting forth a lot of effort into it, and actually believe in it. They have a real interest in seeing steemit succeed, because when steemit succeeds, we all succeed.

Who Could Even Succeed in Making an Extra $30 Trillion That Never Existed?

I guess those running the United States government haven't figured out that one yet, but the ship looks like it's sinking to me.

Hold on. Am I Understanding This Correctly? Not Only is America Coming up About $30 Trillion Short Right Now, But the $1.5 Trillion That's in Circulation is Actually Fiat?

Yeah, that's why I'm buying land and food producing plants now, while everyone still thinks it's worth something, and why I'm on steemit.